Il Giappone ha appena acceso la miccia (preparatevi…)

Il Giappone ha appena acceso la miccia (preparatevi…)

Japan is dumping US debt. And in this video, I'm going to tell you why that's so bad for you, why that's so bad for the global economy. Now, firstly, there's been a lot of headlines floating around, a lot of videos about the implosion of uh Japanese yen and the US dollar and the global financial system. I've seen this over and over for the last few weeks now. So, this video is just going to be a very calm explanation to bring sanity to it. So I can explain exactly what is happening. I'll also explain realistically where the US dollar and the yen is going to be heading. And spoiler alert, it's not positive. But at the same time, it's not immediate. This is going to happen over a longerterm perspective. But it is important that you understand this. Now, very quickly, if you're fed up with all the mainstream media nonsense, you'll fit in very well on this channel because I dig into the geopolitics, the economics, and all the things that are happening in the world that really shape your life, including what shapes your wallet, your finances, your investments, and your pension. So, if that sounds good to you, make sure to click the subscribe button. It only takes a second and then you'll be kept up to speed with all of the the goings on in the world as it were. Okay. Now, while this isn't an overnight collapse in the Japanese yen, as some people are saying, it really is important for you to get context as to what is happening because it is going to shape the future in quite a dramatic way because there has been a major shift in the Bank of Japan's monetary policy. And most people are either not paying attention to this or they've heard about it but they don't really understand what it means. So it all really began on the 21st of November 2025 when Japan announced a new massive stimulus package. This was for 21.3 million yen which roughly equates to around $135 billion. And this raised flags not just for economists but also currency traders and other central banks around the world. And I think the US Fed is aware of this as well. But they're just not letting the public know that this is a concern because this wasn't just about Japan or the Bank of Japan or even the people of Japan's financial economic crisis that they are in. And we'll talk about debt to GDP uh later. But this also has a significant impact on the US dollar and on more specifically US bonds. And you could see the impact because the reaction was almost immediate. The yen dropped sharply to levels not seen in months which really forced Japanese officials into damage control mode. And at that point, we kind of saw the usual verbal interventions and how the bank would support any problems that came up and, you know, the usual stuff. And it did kind of stave off any sort of um a bigger crisis than we already saw because the yen did sort of bounce off that rhetoric, but it didn't change the underlying and somewhat catastrophic problem that exists. And we'll talk about that shortly because the underlying problem is that Japan's currency is weak and public confidence is very fragile indeed. And because of these things, the currency is becoming a global issue and not just a local issue. Japan has a very unusual currency in that it is so heavily um connected to the US dollar and of course the US dollar is the world reserve currency. So what happens in Japan is important even though people don't seem to think it is but it is. It's so important and why economists follow it so closely. So I'll just tell you the the concern that I have right away and that is that the yen's trajectory right now could really cause damage to the US dollar and if the US dollar is affected in a bad negative way this will will have ripple effects all the way through the global economy. And since Japan's prime minister has come into power, the yen has bounced all over the place. I mean, it's gone up, it's gone down. It's still somewhat down from when she first took power. And if you look at that, it's both from monetary and fiscal policy. The fiscal side is the government spending. They, you know, it's obvious they're committed to very loose um public spending here. They're not looking to tighten it anytime soon because they kind of can't. But when you have a new prime minister coming in, they really want to look good. So they do these policies that help the people. Of course, inflation always follows later, but that's a story for another day. And then you have the monetary side, which is the Bank of Japan, and it's obvious, it's clearly obvious that they are committed to very loose monetary policy right now. So you kind of got a perfect storm of fiscal and monetary policies that are going to affect the yen and the yen will eventually affect the dollar and the dollar willffect eventually affect the global monetary system. Now on top of this perfect storm, you've got the US which tends to keep interest rates higher. They're not high but they're higher. Japan which tends to keeps interest rates low. In fact record lows pretty much globally. And therefore global capital flows to dollars rather than yen. But then there's another twist to this story which we'll come to in a moment which is called the carry trade. In fact, let me cover that now. It might slot in better here. So the carry trade is where investors globally will borrow uh yen and then because it's so cheap and then they will invest that yen in dollars. they'll convert that that yen into dollars because they get a higher yield from the dollars and as a result of that it obviously creates selling pressure on the yen uh constantly. So we talked about this perfect storm. Well, you've got all of those things we just mentioned and I'll summarize that by saying more debt. You've got pressure to sell the yen and you've got no credible tightening cycle in sight. And now we've got issues with Japan's bond market on top of all of this. So this really has gone from the perfect storm to the perfect hurricane. It it really is just a matter of time because if you think about bonds, usually what do they do when the currency weakens? The bonds actually strengthen. And that isn't what we're seeing at the moment. We're seeing both a weakening of bonds and currency. Now there's obviously fluctuations to that. bonds will strengthen, they'll weaken, but overall you are seeing a weakening. And if you're watching from the UK today, uh an easy example would be if you remember what happened to Liz Truss back in 2022. She was the shortest prime minister in British history. Well, what do we see? We saw the guilts selling off very badly. And that is as a result of the same thing. The pound weakened, the guilts sold off. The guilts are are the bonds. Sorry, I should probably clarify. But the difference here is that the British pound isn't the, you know, the most powerful currency in the world. It isn't the global reserve currency and it isn't really affected that badly by what happens in Japan. So, you've got to understand the context here. Now, if you've watched me for a while here, you'll know that I'm a huge historian, especially around financial and economic matters, fiscal and monetary. So, I'll give you a short example here, and that is that if you think about what happened to Japan in the 1980s, because I've already seen a couple of people comparing it to that and saying, "Oh, this will just blow over. It's just like the 1980s and what happened there." Actually, it couldn't be further from what happened in the 1980s. Yes, it was a similar situation, but you got to think now, the underlying situation is so much worse. Now, if you don't know the economic history, back in the 1980s, Japan just had this vertical explosion of assets. And this was all fueled by speculative assets and um just huge amounts of credit, just excessive credit, I think I would say. But when that bubble actually burst in 1990, Japan then entered the lost decade as they called it. But actually, it lasted a lot longer than a decade. It really did. And in some ways, Japan has never really come out of it ever since 1990. So you're talking 35 coming on 36 years here. So what really happened? Well, growth kind of stagnated. Banks were well, they were crippled. You had near interest rates. You had huge um excessive quantitative easing, if we want to use that term. But here's the crucial difference I want you to understand. Back then, Japan was a very different economy to right now. You think they had very young workers. Now, they have very old workers. In fact, Japan is in a population um well, a population crisis, I think, is the best way. Their population is dying. Their birth rate is collapsing. and they just don't have the structure that they previously had to support the people who are in retirement. They also used to have very strong domestic savings and a powerful debt to GDP ratio. The GDP of Japan was incredible back then, but it's not anymore. And in fact, we can even go deeper on that. As a result, you've got fewer workers and younger workers, meaning fewer taxpayers and less GDP to actually prop up those people who are in retirement. This of course leads to more social spending as well on those said people. So this is a recipe for disaster. In fact, Japanese government debt sits at around 20, let's just average it to 235%. It's something like 236.7% right now. That is Japanese government debt to GDP. It is it is staggering and it's the highest in the world. And people have always said, well, Japan can hold it. They can manage it. Yes, they could, but they're not going to be able to going forward because of those things I just mentioned. So, I think you can kind of understand my stance here on this. I think that Japan is in really really big trouble. So let me bring the important aspect into the picture here now then and that is the US. So let's focus on the US because if you think about it, Japan has really been the backs stop of US federal debt for decades. In fact, they have been the largest bond holder of US debt for as far back as I can remember. And at its peak, it held around 1.2 two trillion US dollars. Like truly a staggering number. And if you're in the US, this actually helped you because it enabled US borrowing costs to stay low, which meant that your mortgage rate remained low. Your car financing and credit cards, the the the levels remained low. But that's all about to change if Japan continues to dump these US treasuries. And I think they will. And here's why. Japanese bonds have started to surge to levels that we haven't seen in decades. Now, if you are in Japan, for example, are you going to continue to invest in US treasuries and and other assets, bonds, or are you going to bring that money back home and invest it into Japanese bonds, which may give you a much better and safer return? I think you know the answer and that's exactly what we're seeing. In fact, Japanese 20-year bonds are at the same level as they were in the '90s. And to give you a concrete example here, the Japanese in Q3 uh sold $62 billion alone in treasuries. 62 billion with a B. And what did they do? They took that money back home and invested it into the domestic economy. So overall then what we're noticing is that Japan's behavior is changing the fundamentals the backs stop is shifting. So they're really moving towards um this repatriation of their their money back to creating a backs stop for their domestic economy. Meaning that being the backs stop of the US is no longer working. And most importantly, Wall Street investors and the big firms have started to notice this. In fact, we've got a number of warnings, and I'll read one out to you here. It said that the sustained repatriation of Japanese capital could push US yields higher right across the board. And higher yields mean higher borrowing costs, not just for the government, but for you, for households, and for businesses as well. None of these things are going to be uh good for the US dollar. And actually, we're already seeing some of this happening right now. Think about pre-lockdown period. What were mortgage rates? 3% you could you could, you know, lock in a a mortgage for 3% quite quite easily. What are they now? That same mortgage is closer to 6%. Credit cards, auto loans also higher. So, here's the uncomfortable truth then. If foreign holders of US debt continue to retreat, continue to sell this debt, what does that mean? Well, it means that the US will need to either pay higher premiums on that debt or the Fed will need to turn the money printer back on in effect. Oh, wait. That's exactly what they just did. They don't call it quantitative easing anymore, but that's exactly what it is because that's they consider that to be a politically toxic uh uh term as it were. But that is what they are doing. They've stopped the tightening cycle and they've begun the easing cycle. If you'd like me to talk about that in another video, please drop in the comments below and I'll happily do that. And if you haven't subscribed yet, please do that now as we continue the video. So what makes all of this quite important then is that Japan's problem is now structural. The country's debt sits at 235% that's debt to GDP ratio. Its bond market is under endless strain from stimulus and its government is under constant issues from the uh decline in demographics, the age, the um sort of conflict with China which is really brewing and of course they need even more defense spending now. So it really is just getting worse and worse for Japan. And to give you another piece of evidence here for this, if you think about the recent bond auctions from Japan, they haven't inspired much confidence. So this really is left the policy makers with very few options. If they raise the rates, then debt servicing costs explode. But if they don't raise the rates, the currency will keep sliding. So they really haven't got many options here because either path only accelerates the pressure on the yen. And then of course we're looping back to the carry trade I mentioned earlier. This is the really real X factor in this problem here which a lot of people are kind of missing when they're talking about the decline of the yen. Because if Japan loses control of its currency stability and its bond yields at exactly the same time, then the risk of a very violent unwinding increases dramatically. So what does all of this mean in practical terms then? It means the era of cheap money for borrowing is well and truly over. fixed rate debt becomes much more valuable than the more volatile stocks to investors and volatility in and of itself becomes part of the system. But more importantly, all of this marks a major turning point for the US. For 40 years, the US benefited from foreign governments, foreign holders buying and holding their debt. And this meant that the foreign creditors actually absorbed the debt and by them doing that it sort of mitigated any inflationary effects on a major scale for the United States. Well, that's all about to change. Now, finally, I just want to be clear and say that this isn't an anti-Japan video. Uh this isn't also a video saying that Japan is acting in malice towards the US because they're really not. They are a key partner for the US. This is purely mathematical and economical. Japan has to do this. If they don't, the currency will just collapse. Japan needs all of this capital to flow back home. They haven't got the savings. They haven't got the demographics anymore. They simply just don't have what they used to have when they were this huge powerhouse. And we all know, love or hate this point, that the US is the global reserve currency, meaning that they have been living on borrowed money from the rest of the world ever since the end of World War II when the US positioned themselves very very strategically. It was a a masterclass in economics that the US held the world's gold reserves and they were therefore the obvious choice for being the world reserve currency. And then the rest of the story behind that is a is a lesson for another day. But I really want you to make sure from an individual perspective, from a company perspective, from an investment perspective, your pensions, your savings, whatever it is, I want you to understand this and be prepared for what is coming in the future. Now, finally, if you got a lot of value from this video and you want more like this, please remember to click the subscribe button and definitely leave me a comment. What do you think about what I said today? Other than that, take care. God bless you. God bless your families.

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Japan has made a significant move by dumping US treasuries, leaving many to wonder what the implications of this decision will be. In this video, we’ll delve into the potential consequences of Japan’s actions and explore what happens next for the global economy. With the US treasury market being a cornerstone of international finance, any major shift in investment strategy by a significant player like Japan can have far-reaching effects.
Recent reports show the japan economy is offloading US national debt, sparking concerns about the us economy and the value of the dollar. This situation carries the risk of a broader economic collapse within the global financial system. Join me for a calm explanation to bring clarity to these significant developments and what they mean for you.
What does this mean for investors, economies, and the future of global trade? Find out in this in-depth analysis.

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This video is for entertainment purposes ONLY & designed to help your thinking, not direct it. These videos shall NOT be construed as tax, legal or financial advice and may be outdated or inaccurate; all decisions made as a result of viewing/listening are yours alone.

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